Local in Ann Arbor

The City Budget determines how money may legally be spent. It is a complete accounting of revenues and expenditures for the forthcoming fiscal year. This is really the major work of the City Council and City Administrator. More attention is given to zoning matters and the occasional ordinance change, but the weight of actions lies with expending money according to the Budget.

Note that the General Fund is $118,160, 321. Revenues exactly match these expenditures.

The City Fiscal Year is on a July-July basis. Thus, we are now operating in FY 2022. Yes, the calendar says 2021 but until July of 2022 we are busy spending next year’s budget. (Washtenaw County operates on a calendar year budget, so they are still living in 2021. The Federal Government FY begins October 1, as does the State of Michigan.) Every year, the City Council is required to approve the next year’s budget by the second meeting in May. Here is the FY 2022 budget as approved in May 2021.

This year and last year have been rather confused because the COVID pandemic changed nearly everything. City revenues, which depend in part on parking revenue, were down severely and in the December 2020 Budget planning session  City Administrator Tom Crawford’s summary was, “We’re in turbulent waters.” Projections were that the Budget could be facing a $2.8 million to a $9 million shortfall.

Several months later, the Administrator’s message was still cautious.

In Budgetspeak, this meant that the deficit had to be made up by using reserve funds. We don’t like to do that. The savings are there in case of catastrophe (a worldwide pandemic comes to mind). Note that sentence about long-term stability. That is a budget director telling you “we have to tighten our belts”. The role of a budget director is to make sure that money is always available for its required uses and never to overspend.

Stresses and Strains

There were stresses obvious already in December 2020. From the news report:

The city’s sustainability office has identified a need for $6 million next fiscal year and $11.2 million the following year to work on implementing the A2Zero plan, Horning said. At a bare minimum, if the work was pared down with portions of the A2Zero plan deferred, the office would need $3.2 million next fiscal year and $5 million the following year, he said.

Note the disjunct: Sustainability (e.g. A2Zero) wanted $6 million, but there was already a structural deficit, and then more trouble likely ahead just to keep the boat floating. Here we see a suggestion just to “pare down” A2Zero.  “Council Member Ali Ramlawi, D-5th Ward, said the A2Zero plan council unanimously adopted this year was ambitious and the city has lacked money to fully support it right away.” But Mayor Taylor pushed back. “In my view, the work that is promised or foreseen under A2Zero is really a moral imperative,” Mayor Christopher Taylor said. “It’s imperative that we do this here in Ann Arbor and it’s imperative that we do it in every jurisdiction throughout the country and indeed the world, ultimately.” Taylor is being consistent. In April 2020, as we were in the midst of the first hit of the COVID crisis, he was quoted in the Michigan Daily as saying this:

“All lines of work, all manners of doing things, are open to interrogation. The old way of running an economy, the old way of doing business, the old way of operating civil society is subject to change, subject to reexamination, subject to improvement. As we figure out where we go next, reconstituting as a functioning society with the goal of carbon neutrality will be a part of our recovery.”

This vision is hard to reconcile with the work of running a city with a balanced budget. In fact, it renounces that concept.

American Rescue Plan

Happily for all local governments, the Federal Government enacted a plan to rescue them. As announced by Senator Debbie Stabenow, Ann Arbor is in line to receive $24,182,630. (It will not be coming all at once, but this is a firm promise.) There are some restrictions and some suggestions. You are not to use it to pay yourself bonuses (as one Michigan county did). You are not supposed to use it to pay off debt or to cut taxes or enrich pensions. It is supposed to be used to make our communities stronger, including the repair of failing infrastructure like water utilities and roads. Most attractive is the idea of doing projects that would normally not be affordable, such as new facilities (hello, WasteWater Treatment Plant?).

Accordingly and sensibly, the Ann Arbor City Council passed (by voice vote!) a resolution (June 7, 2021) that asks the City Administrator to prepare a plan to use the money. The resolution, sponsored by CM Ali Ramlawi and CM Elizabeth Nelson, notes a number of outstanding grant requests for Federal funding and some outstanding priorities, such as infrastructure, public health, and making public facilities more resilient against environmental stresses. The Administrator is asked to bring that report to Council by October 2021.

But That was Then

It looks as though the Council will not be getting that report. In a sudden, shocking move, a majority of Council voted to terminate the City Administrator, Tom Crawford. The vote is back on the agenda for reconsideration on August 2. If the move to reconsider the resolution passes, the Council could then re-debate and revote, or it could postpone the action until a subsequent meeting. Certainly this action is proving to be controversial.

If the action stands, Council is rudderless as far as the Budget goes. It will take some months to replace Mr. Crawford, and time is not friendly in this case. Who will be steering the ship? Maritime metaphors abound. We can expect that Taylor will want to take a different tack, as he has vehemently stated this. Will this mean a direct transfer of Rescue Money to A2Zero? As noted, the request for this year and next year was $17 million. The $24 million would address that nicely.

UPDATE: Council voted to terminate Tom Crawford’s appointment as City Administrator on July 20, 2021. A subsequent motion to reconsider on August 2 failed. He has now accepted a settlement.

SECOND UPDATE: Bridge Magazine has a review (August 5, 2021) of issues surrounding the American Rescue Plan.

THIRD UPDATE: Consolidation of power over City funds is continuing with proposals of ballot measures on the November 2021 ballot.

This entry was posted on July 30, 2021 at 6:05 pm and is filed under civic finance. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below, or link to this permanent URL from your own site.